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Transition 2012

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Economy Update: Romney Faces Offshoring Criticism

by Newsteam Staff
June 27, 2012

Employees make circuit boards at an electronic component factory in Hefei, China, May 2, 2012.  (Courtesy Reuters) Employees make circuit boards at an electronic component factory in Hefei, China, May 2, 2012. (Courtesy Reuters)

A new report on GOP presidential hopeful Mitt Romney’s corporate history has opened new a line of attack on his domestic job creation record (ABC) as he continues to face a tight race on the economy.

An investigative story by the Washington Post‘s Tom Hamburger says that while Romney ran Bain Capital, the firm invested in other companies that specialized in relocating jobs done by U.S. workers to new facilities in low-wage countries like China and India from call centers to the manufacture of computer parts.

The report runs counter to Romney’s campaign, which centers in part around his experience creating U.S. jobs, his plans to combat the toll competition for jobs overseas has taken in the U.S. economy, and his promises to bring jobs back to the United States and protect domestic employment by getting tougher with China.

The Romney campaign called the report a “fundamentally flawed” story that skirts explanation (Politico) of the difference between “outsourcing” and “offshoring,” or shipping jobs overseas.

The progressive blog Think Progress notes that, while the Romney camp is technically correct on how the Post article confused the two terms, it “doesn’t change the fact that Bain, under Romney, invested in companies whose sole purpose was to move jobs to other countries, directly countering the narrative that Romney has been trying to set.”

However, at Forbes, Dan Ikenson writes that Romney should defend himself and delve into the economics of  “U.S. direct investment abroad” versus “shipping jobs overseas.”

“The vast majority of U.S. direct investment abroad (what the president calls “shipping jobs overseas”) goes to other rich countries (European countries and Canada), where the rule of law is clear and abided, and where there is a market to serve,” Ikenson said. “The primary reason for U.S. corporations establishing foreign affiliates is to serve demand in those markets – not as a platform for exporting back to the United States.”

The Atlantic’s David A. Graham says that outsourcing was a potent issue in the 2004 election and could hurt Romney in 2012, especially in Rust Belt swing states that have been hit hard by a bad economy and account for many electoral votes.

President Barack Obama’s campaign seized on the news, deploying senior campaign strategist David Axelrod on a conference call with reporters (The Hill), adding outsourcing criticism to stump speeches (USAToday), and churning out ads on the issue to run in swing states starting Tuesday (HuffPost).

For more on the candidates’ stances, check this issue tracker on The Candidates and the Economy.

Suggested Other Reading:

In a May report, the Brookings Institution looks at the slow growth of U.S. manufacturing jobs during the last two years, related geographic implications, and if it signals a renaissance for U.S. manufacturing and recovery from years of outsourcing or represents just a temporary respite from long-term decline.

In March, CFR’s Edward Alden looked at why big companies are not investing in the United States and how to attract them at the Renewing America project.

– Gayle S. Putrich, Contributing Editor

1 Comment

  • Posted by Dave

    I think that if Romney remains the citnossent conservative that he claims to be, he’ll get another shot at the nomination sometime down the line. You’re joking right? Willard would never find a more perfect scenario to become the Republican nominee as he had in 2008, yet he still managed to repel the majority of Republican voters in almost every region of the country. He spent a huge chunk of his family fortune ($10 per vote no less), had the conservative establishment supporting him, yet still somehow managed to come in third place on Super Tuesday. Would it even be logistically possible for Willard to finance another $100 million campaign, half or more from his own campaign, when he failed to win a single prominent battle in this year’s primaries, save for the one in Michigan that McCain basically forfeited. he’s young and he still has plenty of opportunity to have a bright political future. Willard Romney’s career in public office is almost assuredly over. I have a little bit of egg on my face as well for taking this guy seriously for nearly a year. As recently as November, I gave him an 80% chance of winning the nomination due to his phantom strength in the early states.“Out of love for America, I must stand aside.”One of the more hilarious concession speeches I’ve ever heard. Secretary of the Treasury Romney? Vice President Romney? McCain needs the conservative support, and when it comes to fiscal matters Romney would be a strong choice. I expect McCain is too petty to let his personal grievances with Willard trump any political advantage it may offer to put Willard in his administration. Maybe I’ll be proven wrong, but McCain’s sandbox-worthy petulance towards Willard in the last debate gives me doubts.

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